Home Newark Press Releases 2012 Former CFO of New Jersey Investment Management Company Pleads Guilty to Wire Fraud and Tax Evasion

Former CFO of New Jersey Investment Management Company Pleads Guilty to Wire Fraud and Tax Evasion

U.S. Attorney’s Office January 18, 2012
  • District of New Jersey (973) 645-2888

NEWARK, NJ—The former chief financial officer of Columbus Hill Capital Management LP, an investment management firm based in Short Hills, N.J., today admitted to embezzling more than $10.4 million from his employer, announced U.S. Attorney Paul J. Fishman.

David Newmark, 39, of Towaco, N.J., surrendered to federal authorities today and pleaded guilty to an information charging him with one count of wire fraud and one count of tax evasion. Newmark entered his guilty plea before U.S. District Judge William H. Walls in Newark federal court.

“David Newmark admitted stealing from his own management company, creating a phony account to collect more than $10 million in fraudulent deposits,” said U.S. Attorney Fishman. “Making personal use of company cash, it was only a matter of time before he was caught with his hand in the piggy bank. Now not only will Newmark have to pay back the money he stole, he will have to pay a debt to society as a convicted felon.”

According to documents filed in this case and statements made in court:

Newmark admitted that between February 2008 and March 2011, he embezzled from his former employer by requesting checks and wire transfers from custodians of the investment management company accounts and diverting the funds to bank accounts he controlled. Newmark deposited the checks and wires—including a single wire transfer of more than $2.4 million in April 2010—into a bank account he set up with a name similar to that of his employer. The majority of the $10.4 million that Newmark embezzled came from the management company, rather than investor funds.

For the 2008 tax year, Newmark did not disclose to the Internal Revenue Service (IRS) more than $2.8 million he received in connection with the fraudulent scheme. That failure resulted in a tax loss to the United States of $1,012,441.

The wire fraud charge carries a maximum penalty of 20 years in prison and a $250,000 fine, or twice the pecuniary gain or loss resulting from Newmark’s criminal conduct. The tax evasion charge carries a maximum penalty of five years in prison and a $250,000 fine. Sentencing is currently scheduled for April 24, 2012.

As part of his guilty plea, Newmark has agreed to make full restitution to the victims of his offenses for all losses resulting from his crime and has agreed to forfeit $10,442,379.90 to the United States. Newmark paid an initial installment of $525,165.65 today.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Michael B. Ward in Newark; and IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge JoAnn S. Zuniga in Newark, for the investigation leading to today’s guilty plea. U.S. Attorney Fishman also thanked Columbus Hill Capital Management for its cooperation in the investigation.

The government is represented by Assistant U.S. Attorney Charlton A. Rugg of the U.S. Attorney’s Office Economic Crimes Unit in Newark.

This content has been reproduced from its original source.